Russia's Prime Minister Medvedev, Deputy PM Dvorkovich, and Finance Minister Siluanov (R-L) at a budget meeting for 2017- 2018 (photo: dpa)

False dawn for Russia’s economy as cheap oil backs Kremlin into a corner

The Russian economy relies heavily on oil exports. Although some of its indicators suggest a temporary respite, continued low oil prices would leave Russia trapped with a weakened ruble and spiralling inflation. The consequences for Russia and President Vladimir Putin could be dire.

Recent economic data show the Russian economy bottoming out. Following growth of 0.6 per cent in 2014, gross domestic product has contracted sharply this year, with the annual decline accelerating from 2.2 per cent in the first quarter to 4.6 per cent in the second. But during summer it seemed that the worst might be over. Seasonally adjusted industrial output for June dropped only 0.1 per cent compared to...

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Professor Stefan Hedlund
Even under the positive scenario of oil prices recovering to US$70, fiscal optimism cannot stretch much beyond 2016
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